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alternate

grocery store economics for downloadable games

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I was thinking about how one gamer might pay $30 for a downloadable game without hesitating over the expense. He is simply not on a budget. A second gamer may be on a very tight budget, and $15 versus $30 would hugely influence his decision to buy the game. How can you sell your game for $30 to the first person, without losing the $15 sale to the second person? Grocery stores accomplish this through coupons. The first person doesn't bother with the tedium of clipping coupons and is willing to pay a higher price. The second person is on a tighter budget, so clipping coupons is worth the extra effort. So, how do we do this for games? I want to focus on downloadable games, for two reasons. One, there is a lot of flexibility in how you can sell stuff online. Two, I bet nobody in this forum is in a position to influence how games are sold in retail stores! EDIT: I'm not suggesting anything as boring as actual coupons or rebates. In my latest post, I've suggested an easter egg as a way of detecting the low-budget gamer (see below). [edited by - alternate on April 5, 2004 10:26:52 PM]

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Coupons are already widely used in retail game sales but they are usually done as rebate coupons. Buy the game, send in the coupon and get the rebate. The same system could easily be applied to downloadable games.

The problem is that downloading is immediate. Retail rebates count on the fact that the purchaser has to send in the coupon. Only those on a budget will go to the trouble of doing this (companies state that only about 40% of purchasers ever claim their rebate). On the net the buyer would have immediate access to the rebate system and would be more likely to use it.

You could make the game print an actual rebate form or just require someone to write to a snail mail address quoting their serial number to get the rebate but it seems rather silly to download/buy now but have to mail in for a rebate.

Dan Marchant
Obscure Productions (www.obscure.co.uk)
Game Development & Design consultant

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I have to agree with Obsure. Most rebate/coupon programs assume high failure rates. Providing an online rebate, that is almost instanly redeemable is not a good idea if you need the additional revenue.

Creating a system to process and monitor these kinds a programs can get expensive, moneywise and timewise. It would almost be better just to charge $19.95 and be happy.

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Hehe, I thought of coupons but I forgot about rebates. I find rebates very distasteful, and I agree with both of you that rebates aren''t a good idea for downloadable games.

However, that really isn''t what I''m suggesting.

So, some guy downloads your game''s trial version. Your trial version has a "buy now for $30" button. Traditionally, you let him play a few levels, or let him play for a few weeks... after that, he is forced to either buy the game for $30 or dismiss it. This is an ideal strategy for the high-budget gamer -- now that the trial has expired, he''s likely to buy the full version. However, the low-budget gamer will probably dismiss the game at this point.

How about, instead of disabling all functionality, your trial version retains some tedious gameplay that can unlock a $15 price? For example, retain a very boring level where bad guys keep respawning. After the player kills 100, print a message that says he can unlock a $15 price if he kills another 1000. This is kinda nice because the player feels like he''s "earning" the lower price.

However, this strategy is not ideal. Rather than identifying high-budget vs. low-budget gamers, it really just identifies casual vs. hardcore gamers. I''m hoping someone here can come up with something better.

yspotua, certainly a rebate program would be a logistics headache, but an unlockable-lower-price program should be fairly simple. I''m sure you could work something out with your payment processor.

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quote:
Original post by alternate
How about, instead of disabling all functionality, your trial version retains some tedious gameplay that can unlock a $15 price? For example, retain a very boring level where bad guys keep respawning. After the player kills 100, print a message that says he can unlock a $15 price if he kills another 1000. This is kinda nice because the player feels like he''s "earning" the lower price.
I can''t see how this would work. By introducing a boring level you are making the game bad and the person is even less likely to want to buy it.

In fact I think this whole concept is wrong. Entertainment software isn''t a commodity item that people buy because it is on special offer today. If you want two pricepoints think a better (and simpler way to go) is add on levels). Version one at $15.00 has twenty levels and the gold edition at $30 has 50 levels.



Dan Marchant
Obscure Productions (www.obscure.co.uk)
Game Development & Design consultant

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quote:
Original post by Obscure
In fact I think this whole concept is wrong. Entertainment software isn''t a commodity item that people buy because it is on special offer today. If you want two pricepoints think a better (and simpler way to go) is add on levels). Version one at $15.00 has twenty levels and the gold edition at $30 has 50 levels.
*Applause*

Shareware titles used to, effectively, be like this. You''d get "Episode 1: <Subtitle here>" free, then be able to purchase additional individual levels for, say, $9.99 each, or purchase all 6 additional leves (along with goodies like a CD, printed manual, etc) for a slightly lower price.

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Obscure, thanks for the link! I wasn''t aware that dexterity had an active forum.

You mention a regular vs. a gold edition, where the gold edition has more content (or goodies like Oluseyi mentions). I suppose this is one way to capture both the high- and low-budget gamer.

quote:
Original post by Obscure
I think this whole concept is wrong.

I don''t really want to argue with you, Obscure. I can see how this notion of "different prices for different people for the same thing" might be distasteful to some people. I''m keeping this thread alive because I''m hoping for feedback from others on this forum.

Regarding my "boring extra level" idea, yeah, I''m not too happy with it, either. Instead, I propose this slight modification:

How about an easter egg in your trial version which unlocks a lower price? Rig it so that a gamer can only find your easter egg by first "beating" the game and then replaying it again and again. If a gamer finds the egg, it seems likely that (A) he loves your game, and (B) he''s not planning to buy the full version.

Thoughts? More ideas?

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quote:
Original post by alternate

I don't really want to argue with you, Obscure. I can see how this notion of "different prices for different people for the same thing" might be distasteful to some people.

I didn't mean it was wrong as in "distasteful". I meant that it is wrong as in “it won’t work”.

1. All the feedback from indie/sharware companies (both here and at the Dexterity site) is that lower prices do not increase sales. In fact the opposite. Time and again they report that increasing prices to $19.99 from a lower price point increases sales.

2. Vouchers/price promotions - The purpose of these is not to encourage people who can't afford a product to buy it. They are to get someone who has already decided they can afford a product to buy yours, instead of buying someone else's. People tend to shop where they can afford to shop so a person who can't afford your $19.99 game will be unlikely to be at your site and will be unlikely to encounter your offer.

3. I am on a games related mailing list. People on the list regularly post info on places doing a good price/rebate/sale on games. The interesting thing of note however is that people only ever post info on games they like or games that list members have identified as good/worth having and never on games that are deemed to be "bad". They are looking for a bargin on a product they have already decided to buy and never for a game they can "afford to buy".

4. Entertainment purchases are unnecessary. As such people will:
i. Buy it because they can afford it,
ii. Not buy it because they can't afford it,
iii. Buy it despite the fact they can't afford it ("I will be extra good next month to make up for it"),
iv. Download a pirate version.
- A customer will buy your game because they want your game (or because they feel that $19.99 is a price that isn't worth worrying about - an impulse purchase). In either case knocking $5.00 off wont make a difference.
- A customer may arrive at your site who can afford your game (normally) but who currently only has $14.00. You can't run a business where you price products to attract a customer that is tempararily short of cash. It wont guarantee the sale (they are just as likely to save their last $14.00 in case the see something they NEED) and it will almost certainly result in a significant portion of the people who can afford $19.99 paying $14.00 instead. – A $5.00 loss per customer for no real gain.
- A person (note I didn't call them a customer) who really, truely can't afford your game at $19.99 won’t be able to afford it at $14.99.

quote:
How about an easter egg in your trial version which unlocks a lower price? Rig it so that a gamer can only find your easter egg by first "beating" the game and then replaying it again and again. If a gamer finds the egg, it seems likely that (A) he loves your game, and (B) he's not planning to buy the full version.

Thoughts? More ideas?

How do you think your customers will feel (the ones who did pay for the game) when they find out in some forum that by not paying for it they could have got a discount? The person you describe in your example isn’t going to buy your game. Forget him and focus on your real customers.

Conclusion
This whole concept is simply bad business. There are millions of potential customers out there who can afford your game and you will never have enough time to reach them all. Despite that fact you are planning to spend this valuable time in an attempt to attract customers who can't afford your game. The key point in all of this is that you are attempting to attract a market that simply doesn't exist.

Entertainment software is unnecessary and as such worthless. The only value it has is "percieved value" based on the image you create through marketing and the price point. That is the reason for item 1 above. Software sold at $5.00 is preceived to be worthless compared to the same software sold at $19.99.

If you want your game to be played by people who can't afford it (a very worthwhile desire) then give it away free. Otherwise focus your limited resources on selling your game to the millions of potential customers who can afford it. Focus on giving them something extra so that they will remain good customers and buy your next game.

Dan Marchant
Obscure Productions (www.obscure.co.uk)
Game Development & Design consultant

[edited by - obscure on April 6, 2004 1:17:00 PM]

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